Hart v Veloce Expresso Pty Ltd (t/as Azucar Café) (No.2) [2019] NSWDC 447

District Court New South Wales

Medium Neutral Citation: Hart v Veloce Expresso Pty Ltd (t/as Azucar Café) (No.2) [2019] NSWDC 447 Hearing dates: Dealt with on the papers Date of orders: 06 September 2019 Decision date: 06 September 2019 Jurisdiction: Civil Before: Smith SC, DCJ Decision: The plaintiff is to pay the first defendant's costs of the District Court proceedings on an ordinary basis between the commencement of the proceedings and 13 February 2019 and then on an indemnity basis thereafter. Catchwords: COSTS – Party/Party – indemnity basis – offer of compromise Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Equity 8 Pty Ltd v Shaw Stockbroking Ltd [2007] NSWSC 503 Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd (No.2)) [2014] NSWCA 391 South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2 Category: Costs Parties: Plaintiff: Julie Hart First Defendant: Veloce Expresso Pty Ltd (t/as Azucar Café) Second Defendant: Assetlink Services Pty Ltd Representation: Counsel: Mr J Rowe for the plaintiff Mr D Hanna for the first defendant

Solicitors: LHD Lawyers for the plaintiff Mills Oakley Lawyers for the first defendant File Number(s): 2017/00064861 Publication restriction: Nil

Judgment 1. On 23 April 2016 the plaintiff slipped and fell in the domestic terminal known as Terminal 2 of Kingsford Smith Airport in an area adjacent to the café which was run by the first defendant. She suffered a number of injuries as a result of that fall and commenced proceedings against the first defendant as well as against the cleaning company responsible for cleaning the area on which she fell. 2. The matter was heard before me on 19, 20 and 21 February 2019 and on 5 April 2019. On 14 June 2019 I gave judgment being a verdict for the first defendant and ordered that the plaintiff pay the first defendant's costs. 3. Leave was given to the first defendant to apply for variation of the order for costs. It has done so and seeks an order that the plaintiff pay its costs on an ordinary basis between the commencement of the proceedings and 13 February 2019 and on an indemnity basis thereafter. 4. The basis for that application is that on 12 February 2019 the first defendant's solicitors served an offer of compromise on the plaintiff's solicitors in the following terms: "The First Defendant offers to resolve the entirety of the Plaintiff's claim against it on the following terms: 1 Judgement in favour of the Plaintiff as against the First Defendant in the sum of $99,166.00. 2 This offer is open for acceptance for 6 days and expires on 18 February 2019. This offer is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005 [UCPR]." 1. Rule 20.26 provides as follows: 20.26 Making of offer (1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms. (2) An offer under this rule: (a) must identify: (i) the claim or part of the claim to which it relates, and (ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and (b) if the offer relates only to part of a claim in the proceedings, must include a statement: (i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or (ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and (c) must not include an amount for costs and must not be expressed to be inclusive of costs, and (d) must bear a statement to the effect that the offer is made in accordance with these rules, and (e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and (f) must specify the period of time within which the offer is open for acceptance. (3) An offer under this rule may propose: (a) a judgment in favour of the defendant: (i) with no order as to costs, or (ii) despite subrule (2) (c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff's costs, or (b) that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or (c) that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the offer. (4) If the offeror makes an offer before the offeree has been given such particulars of the offeror's claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that: (a) the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and (b) in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14 (2). (5) The closing date for acceptance of an offer: (a) in the case of an offer made two months or more before the date set down for commencement of the trial—is to be no less than 28 days after the date on which the offer is made, and (b) in any other case—is to be such date as is reasonable in the circumstances. (6), (7) (Repealed) (8) Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer. (9) An offer is taken to have been made without prejudice, unless the notice of offer otherwise provides. (10) A party may make more than one offer in relation to the same claim. (11) Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for the offer. (12) A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division. (Emphasis in original) 1. Rule 42.15 of the UCPR applies if an offer is made by the defendant but not accepted by the plaintiff and the plaintiff obtains an order for judgment on the claim no more favourable to the plaintiff than the terms of the offer. If the provision applies then r 42.15(2) provides: (2) Unless the court orders otherwise: (a) the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis: (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made. 1. The plaintiff argues that there ought not to be a special cost order in favour of the first defendant for three reasons: first, the period for which the offer was open was not reasonable and therefore the offer did not comply with the requirements of r 20.26(5). Secondly, that the offer was not genuine because it contained no compromise and thirdly, that the offer was not reasonable or put another way, it was reasonable for the plaintiff to refuse to accept it. 2. In respect of the first of these the defendant points to the fact that the offer was open for a period of six days and set to expire on the day before the trial was due to begin. That fact in and of itself does not make the period unreasonable as the rules (20.26 and in combination with 42.15), leave open the possibility of an offer which expires in a similar period. The plaintiff argues however, that it is clear that "the offer of compromise was made on the eve of the hearing of the trial at a time when obtaining instructions would be incredibly difficult". It was also argued that in the offer itself there was "nothing concrete for the plaintiff to use in making an assessment as to the adequacy of the offer, certainly not in the time available". 3. I reject those arguments. Experience shows that generally speaking, the time at which a plaintiff will best be in a position to judge the adequacy of an offer is shortly before the trial. It is at that point when the matter should be in sufficient readiness for all of the issues to be apparent and indeed for both Counsel and solicitors to be aware of the strengths and weaknesses of the plaintiff's case. In any event, the submission is undermined by the fact that at the very time the offer was made the plaintiff had entered into a consent judgment with the second defendant wherein she agreed to terms including judgment for the second defendant and an order that the second defendant pay her legal costs and disbursements in the sum of $70,000. The fact of that settlement suggests that the assertions made in support of this argument are untenable and should not be accepted. 4. I conclude that the period of six days for which the offer of compromise was open was a reasonable period and, no other objection having been put forward as to the form of the offer that it complied with the requirements of r 20.26 of the UCPR. 5. The question then becomes whether the Court should order otherwise in terms of r 40.15(b). In this respect, it is the plaintiff who bears the onus of persuading the Court that indemnity costs should not be ordered: South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2 at [83]. In Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd (No.2)) [2014] NSWCA 391, McColl J said the following: "41 However, in order for an offer of compromise made under the UCPR to attract an indemnity costs order, it must involve a "genuine offer of compromise" and not merely be made so as to trigger the costs consequences under the rules: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 (at [16]) (Spigelman CJ; Beazley and McColl JJA). 42 Whether there was a real element of compromise is determined objectively according to the circumstances of the particular case at the time the Offer was made rather than with the benefit of hindsight: Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 (at [17]); Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 ("Miwa") (at [11]). It is also - 17 - determined by reference to the rule pursuant to which the offer was made: Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 (at [22]) per Basten JA (Campbell JA agreeing)." 1. The plaintiff relies on a number of circumstances to say that there was no effective compromise and therefore that there was no genuine offer included in the offer of compromise. These included: 1. the plaintiff had a serious physical injury requiring surgery, extensive treatment and ongoing restriction; 2. evidence from two experts formed the opinion that the slipping hazard was caused by wet mopping the floor and leaving it wet. There was no contrary evidence as to the creation of the hazard; 3. the conclusion of the experts was confirmed by examination of the CCTV footage; 4. evidence available from the second defendant indicated its employees had not wet mopped the floor. The only common-sense conclusion, it was said, was that the first defendant as the only other party who would probably have a reason to wet mop the floor would have done so; 5. the first defendant indicated it would not call liability evidence. This circumstance would be expected to give confidence to the Judge in accepting the opinion of the two plaintiff experts as evidence from the first defendant would appear to be readily available; 6. the offer did not include a calculation as to how it was made up; 7. the offer was subject to the UCPR pursuant to which, in a claim for personal injury damages, if a verdict does not exceed $100,000 the plaintiff can only recover from the defendant by way legal service expenses, an amount of 20% of the verdict or $10,000 whichever is the greater. It was said that the actual legal services costs in relation to the first defendant at the time of the offer were about $174,617. It was argued that the difference between costs recovered and costs incurred would be recovered from the verdict leaving nothing for the plaintiff. 1. The following points may be made about these arguments. The first is that nowhere in the plaintiff's statement of claim was it asserted that the first defendant or any of its servants or agents wet mopped the floor. That means the arguments concerning the evidence about the wet mopping of the floor did not affect the genuineness of the offer of compromise. Secondly, there was no need for an offer of compromise to set out any calculation as to how the amount is made up. The plaintiff ought to have been well aware at the time that the offer was served of the amount of her economic loss, out of pocket expenses etc and, as suggested in the plaintiff's own submissions on costs, was well aware of what her lawyers thought would be likely if she were to succeed given comparable verdicts. 2. Finally, in respect of the amount of costs incurred by the plaintiff in respect of the claim against the first defendant as at the time of the offer of compromise, there is simply no evidence to support that and I disregard it. 3. The plaintiff also presents arguments concerning the issue of contributory negligence which was an alternative finding in the judgment. That argument is based upon an assertion of facts that include "the plaintiff did not see the warning cone". The warning cone was a cone which was placed by an unknown person in the vicinity of an apparently wet area on the walkway on which the plaintiff slipped and fell. It may be that the plaintiff had given instructions that she did not see the cone but her lawyers had available to them CCTV footage which showed that she could only reasonably have been aware of the cone. For that reason, I reject the submission that it would appear unlikely that at the time of the offer of compromise that there would be a deduction for contributory negligence. 4. I consider that there were difficult issues of liability for the plaintiff in this case and in addition there were previous injuries suffered by the plaintiff which had not been disclosed to her medical experts which left her at some risk of a reduction in any award of damages even if she were successful on liability. For those reasons, in spite of the apparent confidence of the plaintiff in her own case, the offer of compromise in the amount set out above constituted a genuine offer. 5. The plaintiff's third argument is that the offer was not reasonable, or perhaps more accurately, that it was not unreasonable for the plaintiff to reject the offer in all of the circumstances. In this respect, the plaintiff relies, somewhat inconsistently with her previous position, on the complexity of the issues saying, at [13] of her submissions "[t]his case was unusually complex for a case involving slip and fall personal injuries". One would have thought that the complexity of the issues in an otherwise fairly straightforward area of litigation would heighten the need to seriously consider any offer of compromise made by a defendant to those proceedings. 6. The plaintiff also says that the full parameters of the dispute were still uncertain at the time of the offer, relying upon the decision in Equity 8 Pty Ltd v Shaw Stockbroking Ltd [2007] NSWSC 503 at [42]. As I have explained above that was not the case here. As the matter was close to trial it would be reasonable to expect that the issues were at their most certain at the time of the offer of compromise. In all of the circumstances I do not consider that the plaintiff has established that there is any real basis for the Court to order otherwise. 7. For that reason, I make the following orders: 1. Order 2 made on 14 June 2019 is amended to read: "The plaintiff is to pay the first defendant's costs of the District Court proceedings on an ordinary basis between the commencement of the proceedings and 13 February 2019 and then on an indemnity basis thereafter."